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The Third Billion

If China and India each represent 1 billion emerging participants in the global marketplace, then this “third billion” is made up of women, in both developing and industrialized nations, whose economic lives have previously been stunted, underleveraged, or suppressed. These women, who have been living or contributing at a subsistence level, are now entering the mainstream for the first time. We estimate that about 870 million of them will do so by 2020, with the number conceivably passing 1 billion during the following decade.

The Third Billion

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A The Third Billion As growing numbers of women enter the economic mainstream, they will have a profound effect on global business. by DeAnne Aguirre and Karim Sabbagh1comment leading ideas Leading Ideas numbers will hasten the integration of the regions where they live into the larger economy. huge and fast-growing To date, the potential of group of people are poised women as economic players has to take their place in the been unrealized. The reasons be- economic mainstream over the next came evident recently in a Booz & decade, as producers, consumers, Company analysis of data from the employees, and entrepreneurs. This International Labour Organization group’s impact on the global econ- (ILO), a United Nations constit- omy will be at least as significant as uent that tracks global workforce that of China and India’s billion- statistics. Globally, many women plus populations. But its members could be considered “not prepared” have not yet attracted the level of (lacking sufficient education, usu- attention they deserve. ally defined as secondary school); If China and India each repre- others are “not enabled” (lacking sent 1 billion emerging participants support from families and commu- in the global marketplace, then nities); and a significant number this “third billion” is made up of are both. The specific characteristics women, in both developing and of these two major constraints vary industrialized nations, whose eco- widely, according to local social, nomic lives have previously been cultural, and economic conditions. stunted, underleveraged, or sup- But as the constraints are alleviated pressed. These women, who have — through increased migration to been living or contributing at a sub- cities, the expansion of educational sistence level, are now entering the opportunities, changes in local laws mainstream for the first time. We and cultural norms, and invest- estimate that about 870 million of ments in infrastructures that sup- them will do so by 2020, with the port greater workforce participation number conceivably passing 1 bil- — the Third Billion’s movement lion during the following decade. into the middle class will accelerate. Their presence as economic actors The pattern of this emergence will will be widely felt, because they have probably shift from a graduated long been overrepresented in the incline to a graph that looks more ranks of subsistence agriculture and like a hockey stick. strategy + business issue 59 other resource-based forms of work. We derived the Third Billion As they move into knowledge work, figure by combining the estimated in domains ranging from manufac- number of “not prepared” and “not turing to medicine to education to enabled” women between the ages information technology, their sheer of 20 and 65 in 2020, using data

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Exhibit 1: Women of the Third Billion Representing about one-fourth of the worlds women between ages 20 and 65, the Third Billion falls into six basic categories reflecting how much they are prepared (with education) and enabled (with local support), and whether they live in developed or emerging nations. NOT PREPARED NOT ENABLED NEITHER PREPARED lacking sufficient lacking support NOR ENABLED education, usually from families and defined as communities secondary school 869 million women worldwide lead lives outside the economic system 2 EMERGING ECONOMIES account for 658.8 mil. 94.5% of those women 65.2 mil. 5.5% of those women 32.5 mil. DEVELOPED ECONOMIES 13.6 mil. 1.3 mil. comment leading ideas 97.7 mil.from the ILO. (See Exhibit 1.) Mostof these women — about 822 mil-The Multiplier Effect Boosting the Potentiallion — live in emerging and devel-oping nations; about 47 million live Source: Booz & Companyin North America, western Europe,and Japan. (Some might argue thatthe women of China and Indiashould not be included, since theyare part of the first 2 billion; if thosewomen are omitted, the number ofwomen meeting our criteria wouldstill reach 525 million by 2020.Counting those still under 20 andnewborn female children, it couldeasily expand to a billion withinthe following generation.) No mat-ter how the numbers are counted,a billion or more women are clearlyabout to participate more fully inthe mainstream economy. This rep-resents a significant force in suchregions as Latin America, Asia, thePacific Rim, the Middle East, east- that has not yet been fully appre- as a whole than investments inern and central Europe, and Africa. ciated, for at least three reasons. male-owned enterprises. First, the impact will be spread broadly; the women of the ThirdThe last decade has shown the Billion are not limited to one coun- The full potential of the Thirdextraordinary effect that huge popu- try, but instead are dispersed in Billion is still unrealized in manylation segments can have when they every part of the globe. Second, localities where overall labor pro-are integrated into the global econo- when women become more active ductivity remains low. These regionsmy (as in China and India). Newly economically, they tend to have are therefore able to reap particular-enabled consumers and workers fewer children. As the birthrate goes ly strong benefits through a coordi-serve as an economic multiplier, cre- down, the social priorities of a cul- nated approach that helps womenating vast markets and increasing ture change, and it becomes easier overcome their “not prepared” andthe size and quality of the talent for more women to gain prepara- “not enabled” status.pool. In periods of relative prosperi- tion and support for leading more Such efforts must start withty, their aspirations and persistence independent lives. Third, these an assessment of the specific con-are engines for growth. In slower women are likely to invest a larger straints faced by Third Billion con-periods, they represent pockets of proportion of their household in- stituents in a given region. Theseeconomic activity that ameliorate come than men would in the edu- may include inadequate infrastruc-the impact of decline. For example, cation of their children. As those ture (lack of roads, schools, andthe growth of emerging consumer children grow up, their economic telecommunications links); legalmarkets in China and India helped impact increases further. This helps prohibitions on female advance-stabilize the global system during explain why, as a report issued by ment; social conventions that in-the downturn of 2008–09. the United Nations Development hibit female participation in the But the multiplier effect of this Fund for Women found, invest- workforce; government restrictionsgroup of women could be much ments in women’s enterprises in on small businesses; outdated ap-greater than those of other demo- developing countries yielded greater proaches to risk and credit; andgraphic expansions, and in a way long-term benefits to the economy other social, legal, cultural, or finan-

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tribution they can make. + DeAnne Aguirre is a senior partner with Booz & Company3 based in San Francisco. She leads the firm’s work on organizational and talent effectiveness. Karim Sabbagh is a Booz & Company partner based in Dubai. He leads the firm’s work for global communications, media, and technologycomment leading ideas clients. cial norms and practices that make idend will not be easy, and it may Also contributing to this article were s+b it difficult for women to go to require much social and legal change. contributing editor Sally Helgesen and Booz & Company Consultant Roshni Goel. school, seek employment freely, But that change has already begun benefit from their earnings, or man- in many places, and it will spread to age their lives in other ways. many more. For leaders, the next Some of these challenges can step is to recognize the value of this be overcome with better planning population of women, and the con- at the local level, whereas others re- quire top-down intervention from national governments. In either case, deanne.aguirre@booz.com the goal should be to harness the power of women in a regional econ- omy, to help develop a more inte- grated and productive activity base. The impact of this type of strategy karim.sabbagh@booz.com could be significant in countries as disparate as Egypt, Malaysia, Ghana, Canada, Italy, and Poland. And this is not only an oppor- tunity for governments. Global cor- porations and nongovernmental organizations should also strategi- cally assess what they can do to enable and prepare these women as potential consumers, employees, and citizens. As Center for Work– Life Policy founding president Sylvia Ann Hewlett has noted, some companies, including Goldman Sachs and Google, are building tal- ent recruitment plans around the potential of the Third Billion. (The center is releasing a report on women in emerging markets in mid-2010.) “By investing in [these women],” Hewlett wrote in a 2010 blog entry on the Harvard Business Review website, “companies are bet- ting on a brighter future — for a workforce just waiting to blossom, for economies whose development depends on this new crop of talent, and, of course, for themselves.” The creativity of the Third Bil- strategy + business issue 59 lion may provide the world with an unprecedented resource for driving economic growth and improving the quality of life over the next de- cade. Reaping this demographic div-